Economic policy

The main orientations of Chinese economic policy — Valdai Club

Increasing mutual exports will help Russia and China to further strengthen not only political, but also economic cooperation. For both countries, the expansion of settlements in national currencies plays an important role in this process.

On July 5, 2021, China celebrated the 100th anniversary of the founding of the Communist Party of China (CCP).

In China, great attention is paid to realizing the Chinese Dream of Chinese National Rebirth, which consists of three stages. The first step is wenbao (absence of hunger and poverty), the second stage is xiaokangbuilding a “middle-income” society, and the third stage is datingthe ideal society of “great harmony”.

The task of building a xiaokang society was introduced to the 16th Congress of the CPC in the report of the President of the People’s Republic of China Jiang Zemin in 2012, as the main task for the next 20 years. During the 19th plenum of 2020, it was noted that the 14th five-year plan is the first five-year plan where the task of building xiaokang society has been accomplished.

The foundations of China’s socio-economic development are laid in the country’s five-year plans. They contain objectives for economic growth, guidelines for economic reforms and industrial modernization. In 1953, the first five-year plan (1953-1957) was formed and focused on the transition from an agricultural economy to the development of advanced industrial production; special emphasis was placed on the development of heavy industry. A total of 13 five-year plans have been implemented.

The first five-year plans outlined a planned approach to economic development; it contained specific quotas and production rates – grain, steel, etc. In the 1980s, China evolved into a socialist market economy, with Chinese touches. In this regard, the importance of central planning has been reduced.

Since the 2010s, increasing attention has been paid to technological development by the Chinese authorities. The main task of the 12th Five-Year Plan (2011-2015) was the development of science, education and high technology. For the first time, particular attention was paid to the environment. During the 13th five-year period (2016-2020), the main emphasis was placed on stimulating innovation development.

From October 26 to 29, 2020, the fifth plenum of the 19th CPC Central Committee was held in Beijing. The plenum was chaired by the Politburo of the Central Committee. The plenum discussed the 14th five-year national socio-economic development plan (FYP) (2021-2025) and long-term goals for 2035. Xi Jinping, general secretary of the CPC Central Committee, described the main directions of the development of China in the coming years. Xi Jinping’s ideas on socialism with Chinese aspects in the new era are developing rapidly in modern China.

First of all, the task is to achieve China’s socialist modernization by 2035. It includes the development and strengthening of China’s economic and technological potential, as well as the development of new industrialization. Much attention has been paid to the modernization of the Chinese management system, as well as to issues of green development and ecology, the concept that “the verdant mountains and emerald waters are priceless treasures.” An important aspect is the deepening of reforms and opening up, including in the area of ​​competition, reform of the property rights system and market-oriented distribution. The development of agriculture and rural areas also received particular attention. It is also planned to create a modern tax, tax and financial system, including the development of research and development in the field of digital currencies.

Strengthening China’s scientific and technological strategic power, education and culture, developing the nation as a scientific and technological powerhouse, increasing the innovation factor in the economy, including key technologies, as well as increasing the efficiency of innovation chains are on the agenda. Research centers are actively developed, support is provided to Beijing, Shanghai and the Greater Bay Area, Guangdong-Hong Kong-Macao, in the establishment of an international science and technology innovation center. In China, there are many not only national, but also international technology parks, for example, the China-Singapore Industrial Park in the city of Suzhou. In this regard, the development of projects in the field of basic sciences and applied research between Russia and China has great potential. However, the continued improvement of legislation in the field of intellectual property, trademarks and other areas of intellectual rights in China will allow the development of such projects more effectively, including the development of joint technology parks. For example, a large project has already been implemented in neighboring Belarus — a joint technopark with China, called “Great Stone”.

Despite the positive growth momentum, some challenges remain. On July 26-27, 2021, shares of Chinese companies listed in the U.S. saw their biggest decline since 2008. The Nasdaq Golden Dragon China Index fell 15% (generally from February’s peak — from 45 %), and the assets of Chinese companies, including IT companies, lost about $800 billion. The Shanghai Stock Exchange index fell 8.5%. The market value of Tencent, Alibaba and many others has plummeted. Also in China itself, regulatory proceedings are underway against Alibaba and Didi Global (the Chinese equivalent of Uber). Currently, there is a certain decline in the volume of industrial production as a whole.

The decline in indices has particularly impacted the educational services sector in China. The titles of the Chinese educational platform TAL Education, New Oriental Education & Technology Group, China Beststudy Education Group, Koolearn Technology, Scholar Education Group actually amortized, losing 40-87% of market value in two days. It is unclear whether shareholders will be able to return their funds in the future on the growth of securities, as Chinese authorities may ban companies in this sector from IPO, and investors fear that these companies will become non- benefit. The sharp drop in the Chinese stock market has affected not only Chinese shareholders but also foreign shareholders, including Russian shareholders, who have also been actively investing in China’s rapidly growing and lucrative education sector. One of the reasons, according to Chinese authorities, is that with the growth of paid educational platforms, children from well-to-do families are given more priority because they can use these platforms, while less well-off children often cannot. , which will make it difficult for them to get into good universities. Nevertheless, the Chinese stock market remains promising for both Chinese citizens and foreign investors.

In the new five-year plan, emphasis will be placed on developing the domestic market, expanding domestic demand and deepening supply-side structural reforms. Digital platforms such as B2B, B2C, C2C, G2C, G2B and G2G are actively developing in domestic and international markets. The advancement of artificial intelligence (AI) technologies will further develop the platform economy in China and around the world.

China’s international initiatives

The initiative launched by Chinese President Xi Jinping in late 2013 consists of two concepts: the Silk Road Economic Belt and the 21st Century Maritime Silk Road. Together, they constitute the Belt and Road Initiative (BRI), which is of great importance for the development of Eurasia. This initiative, presented in China as the “Project of the Century”, covers about 78 countries and aims to build trade routes between China and the countries of Russia, Central Asia, Europe and the coastal countries of the Indo-Pacific region with a network of roads, railways, pipelines, power grids, ports and other infrastructure projects. Under the initiative, Beijing will continue to develop trade relations not only with countries on the Eurasian continent, but also with Africa, Latin America and other regions.

Under the Belt and Road Initiative, new land transport corridors are planned to be built in the coming years, such as the China-Mongolia-Russia Economic Corridor (CMREC), the new continental bridge (NELB), China-Central Asia-West Asia Economic Corridor (CCWAEC), China-Indochina Economic Corridor (CICPEC), China-Pakistan Economic Corridor (CPEC) and Bangladesh-China-India-Myanmar Economic Corridor ( BCIMEC).

The first two corridors cross Russia.

An important goal of the Belt and Road Initiative is not only to boost the development of western regions of China, but also to greatly strengthen economic ties with neighboring countries, which will contribute to stability in Eurasia. In this context, the development of Russian-Chinese relations in the Eurasian region has great potential for linking the Belt and Road Initiative (BRI), the Eurasian Economic Union (EAEU) and the Greater Eurasia Partnership ( EPG).